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We Knew 3M’s Print Would be Tough, but We Were Still Disappointed; Lowering FVE to $187

Joshua Aguilar Equity Analyst

Analyst Note

| Joshua Aguilar |

Wide-moat-rated 3M came up short relative to what we originally earmarked in the third quarter. We lower our fair value estimate to $187 from $195 previously. The driver of the fair value decrease was our midcycle margin assumption, primarily due to 3M’s safety and industrial segment, but also due to margin headwinds in its transportation and electronics segment. Management certainly struck an optimistic tone on the company’s long-term trajectory and its ability to deliver strong growth, margins, and cash conversion, and that the firm will eventually get past these headwinds.

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Company Profile

Business Description

3M is a multinational conglomerate that has operated since 1902 when it was known as Minnesota Mining and Manufacturing. The company is well-known for its research and development laboratory, and the firm leverages its science and technology across multiple product categories. As of 2020, 3M is organized into four business segments: safety and industrial, transportation and electronics, healthcare, and consumer. Nearly 50% of the company’s revenue comes from outside the Americas, with the safety and industrial segment constituting a plurality of the firm’s net sales. Many of the company’s 60,000-plus products touch and concern a variety of consumers and end markets.

3M Center
St. Paul, MN, 55144
T +1 651 733-1110
Sector Industrials
Industry Conglomerates
Most Recent Earnings Sep 30, 2021
Fiscal Year End Dec 31, 2021
Stock Type High Yield
Employees 95,000